The Sheng Siong Group has posted earnings of $30.8 million for the 1QFY2021 ended March, 7.5% higher than earnings of $28.7 million in the corresponding period the year before.
Earnings per share (EPS) for the quarter stood 0.2 cents higher y-o-y at 2.1 cents.
Despite the higher sales from the Chinese New Year in 2021, the group’s revenue inched up 2.7% y-o-y to $337.5 million, due to the high base in 1QFY2020.
The group noted that the quarter’s revenue was slightly higher than revenues of $327.3 million and $319.3 million in the 3QFY2020 and 4QFY2020 respectively, “despite expectation of tapering elevated demand” amid the improving Covid-19 situation.
1QFY2021 gross profit grew 4.9% y-o-y to $93.1 million, outpacing the group’s revenue growth due to the improved gross margin.
Gross margin improved by 0.6 percentage points y-o-y and 0.3 percentage points q-o-q to 27.6% in 1QFY2021 mainly because of better input prices.
Sales mix of fresh to non-fresh remained largely the same in 1QFY2021 compared to 1QFY2020.
Administrative expenses increased by 3.4% y-o-y to $55.9 million, partly due to higher staff costs from the additional headcount needed to man the three new stores opened after 1QFY2020. The heightened expenses were also partly attributable to the higher bonus provision due to the group’s improved financial performance.
The group’s operating margin increased by 0.5 percentage points to 11.2% for the 1QFY2021.
Cash generated from operating activities amounted to $28.9 million during the quarter.
As at end-March, cash and cash equivalents stood at $271.5 million, more than double cash and cash equivalents of $133.7 million the year before.
While the group did not open any new stores in the 1QFY2021, it says there could be a tender for a new shop soon as construction activities have not fully resumed yet.
This comes after the unsuccessful tenders made for two shops at Blk 115A Alkaff Crescent and Blk 610 Tampines North Drive.
“We expect new tenders probably at an accelerated pace towards the end of 2021 and into 2022 as HDB clears the backlog. The group will continue to search for new retail spaces in areas where it is yet to build a presence and to nurture the growth of its new stores and improve comparable same store sale,” says the group in an April 26 statement.
It adds that competition is expected to remain keen among brick-and-mortar supermarkets and online players.
Consequently, the group says it is expecting to record lower revenue in the 2QFY2021 compared to the 2QFY2020’s record revenue of $418.7 million when demand peaked during the circuit breaker period from April to June 2020.
There will also be lesser Covid-19 grants and rebates as the situation improves.
“Even though we were not successful in our tenders for the two shops in Blk 115A Alkaff Crescent and Blk 610 Tampines North Drive, we continue to be on the lookout for new retail spaces, particularly where we have yet to build a presence,” says Lim Hock Chee, CEO of the group.
“The group remains focused on its goal to expand its retail network and improving same store sale in Singapore and China. We will work on driving cost efficiencies, enhance gross margins by working towards a sales mix with a higher proportion of fresh produce and deriving more efficiency gains from the supply chain,” he adds.
Shares in Sheng Siong closed 1 cent higher or 0.6% up at $1.56 on April 26.
